Greenhouse gases: Greenhouse Gas Reduction Fund: studies.

Senators Limón and McGuire, along with Assembly Members Irwin and Rivas, anchor a measure that reorients California’s Greenhouse Gas Reduction Fund revenues and creates a Legislative Counsel Climate Bureau to support climate policy analysis across key committees. The core change establishes a prioritized framework for the fund’s annual proceeds beginning in the 2026–27 fiscal year, directing resources to clean transportation, housing and community investment, clean air and water, wildfire prevention and resilience, agriculture, clean energy, and climate-focused innovation, while phasing out the current system of continuous appropriations effective July 1, 2026. The measure is designed to take effect immediately as an urgency statute.

The bill adds a study and update framework governing offsets and strengthens oversight of climate finance. It requires the state board to complete a study by December 31, 2026 evaluating how offset projects contribute to California’s climate goals, exploring changes to the definition of direct environmental benefits, and assessing the attractiveness and valuation of in-state offset projects, with recommendations on alternative methodologies; some provisions would become inoperative after December 31, 2030. It also directs updates to all existing compliance offset protocols by January 1, 2029 to reflect best available science, including considerations from related international mechanisms and academic and industry practices, and mandates a broader evaluation every five years beginning January 1, 2034.

In addition, the measure gives the Legislature a clear intent to direct specific percentages of fund revenue to dedicated funds managed with multiyear spending plans, covering clean transportation, housing and community investment, clean air and water, wildfire prevention and resilience, agriculture, clean energy, and climate-focused innovation. Appropriations to these dedicated funds would be guided by program-specific, multiyear plans, with the overall framework designed to govern how the fund’s revenues are allocated.

Under the amended and newly added provisions governing the fund’s allocations, the measure restructures the 2026–27 distribution priorities with a multi-tier sequence. Beginning with amounts described in certain Public Resources Code provisions to replace revenues from a fire prevention fee, and other specified revenue streams, the bill directs a preliminary set of funding to establish a Legislative Counsel Climate Bureau. After these initial allocations, the remaining funds would be distributed to a large set of priorities, including a substantial, preplanned allocation to the High-Speed Rail Authority for its core project components. A set of reserved allocations would be made by the Legislature in the annual Budget Act for targeted items such as transit passes, seed funding for a University of California climate research center, rebuilding Topanga Park, and a climate-focused innovation entity tied to the state’s scoping plan. Following these, the remainder would be allocated to the Strategic Growth Council for the Affordable Housing and Sustainable Communities Program, to the Transportation Agency for transit and rail programs, to the State Air Resources Board for community air protection and related incentives, to the Department of Forestry and Fire Protection for forest health and fuel-reduction activities, and to the Safe and Affordable Drinking Water Fund. If annual proceeds are insufficient to fully fund these priorities, allocations would be proportionally reduced by the Department of Finance. Any funds not needed to meet the specified priorities could be appropriated by the Legislature in the Budget Act or through other statute. The measure also clarifies that the new sequencing does not count toward other statutory calculations for funding that year. It provides that the entire package takes effect immediately, reflecting the urgency the authors attribute to climate action.